Thursday, June 14, 2012

Contrarian optimism and the omnibus ballet

The Canadian economy, 'the envy of the world'. Remember that? Of course that in itself was a complete lie more of which is revealed all the time. But who needs memory when you have what passes for politics? For it is only in the world of politics that a government can tout the extreme awesomeness of the Canadian economy, and then claim it needs to be completely rewritten for "jobs, growth and prosperity" to occur.

The effort put in to the large scope of changes in this omnibus bill seems to be significantly more than the effort put in to researching the fantasy growth and risk outlook contained within budget 2012 that this bill claims to be mitigating against. Again today, the Bank of Canada is re-issuing warnings about Canada's economic outlook, far more serious than those described in the budget proposed.

Canadians shouldn't be asking if this bill is democratic, or even needed. Canadians should be asking if it accurately addresses the current situation at all. In the last few months we've gone from gas prices on the frontpage of every newspaper, to pending interest-rate hikes, to a spreading eurozone contagion. Supposed credible economic think-tanks such as the OECD are all over the place in their incorrect forecasts.
Just three weeks ago, the Organization for Economic Cooperation and Development predicted the Canadian central bank would hike rates in each quarter from this autumn through 2013 in quarter-percentage-point increments to cool the housing market, taking the benchmark overnight rate to 2.25% by the end of next year.

Fast forward to today, and a senior official with the Paris-based think tank says the probability of that happening has lessened and there are downside risks to growth forecasts. Blame it on the European crisis, coupled with lackluster U.S. data and more signs of a slowdown in key emerging markets. 
Yes, "just 3 weeks ago". What does this tell you about the credibility of "experts"? One of the most respected economic think-tanks has just done a complete 180 degree about-face on their forecast. Alternatively, you can view one of my forecasts from about 5 weeks ago here. It's amazing how accurate you can be when your goal is to be accurate and not push confidence. The OECD is now talking up 'Dutch Disease'. Who cares? They've just shown you that they couldn't forecast themselves out of a box. When they start talking about the trillions in cheap stimulus and the effect that has on currency valuations then maybe I'll start listening to them, until then they are grasping at straws.

Voting marathon a mistake

The opposition parties are right now in a form of protest are proposing over 800 ammendments broken down into 159 votes. This approach may be flashy and attention grabbing but after the flurry of short-term memory rage nothing substantial will be accomplished. This tactic is in itself self-defeating. I understand the point is to publicize the changes being passed but many people are simply seeing this as a futile excercise, one which is wasting a lot of money to boot. It lends nothing to the credibility of the opposition trying to work with the conservatives. This is not to say I believe the conservatives would work with and entertain opposition ammendments, but the sheer amount being proposed ensures they won't and also ensures that this tactic is seen as a protest, as an attempt to interrupt the proceedings instead of augment them.

A better tactic would have been to introduce a smaller number of serious and well thought-out ammendments, ones which if rejected would squarely show a lack of concern or cooperation on the part of the conservatives. I strongly suspect that the conservatives would not cooperate and the end result would be that the conservative party is cast in a light such that their omnibus bill may be viewed as being ideology driven instead of needs driven.

The conservatives are playing an angle with this omnibus bill that it is needed for their economic action plan. Since their action plan is simply a PR campaign designed to hide the fact that our economy operates on the same fundamentals as all of the other G20 economies and their outlooks, forecasts, and risk assesments have all been proven to be false or understate the problem, countering this angle shouldn't be difficult. This bill is clearly ideologically driven with all ammendments being voted down. Some poeple are saying this is democracy in action, no it isn't; this isn't serious democracy. There is no exchange of ideas or healthy debate here, only a hyper-partisan voting war where as always party-line trumps everything else. This is a show being put on for partisan chest thumping, an omnibus ballet.

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for CenturyLink

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.

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